You’ve got Medicare and a supplement. You think you’re in good shape and then comes a big bill. Here are two examples.

Sandra’s situation: “The ophthalmologist’s charge for cataract surgery was $8,000. He wanted $2,500 up front and now I got a bill for the rest."

Tom’s story: “I needed surgery and went to a specialist. He sent a bill for $11,000. Now, he tells me I have to pay that and I can’t submit it to Medicare.”

Sandra and Tom are justifiably upset with the costs. They pay premiums for their coverage but still have significant out-of-their pocket costs. What happened? In both cases, Medicare would have provided better payment had these beneficiaries selected doctors who accepted Medicare assignment. It’s very possible, given the available Medigap benefits each has, that there would have been no out-of-pocket cost.

Here’s what you need to know about the types of physician billing arrangements with Medicare.

• Physicians who accept assignment: These doctors agree to take Medicare’s payment for services. They can bill only the allowed Medicare amounts, such as 20% coinsurance. Any Medigap policy will cover this, leaving no bill for the beneficiary. These doctors do not have to see every Medicare patient, but when they do, they accept assignment.
• Non-participating physicians: On a case-by-case basis, these doctors decide whether or not to accept assignment. If they do accept assignment, the beneficiary gets the most benefit. If they do not take assignment, they will submit a claim to Medicare on the beneficiary’s behalf and are permitted to add up to an additional 15% to the bill. This is known as Part B excess charges. Medicare will pay the beneficiary, who, in turn, as to pay the patient. Those who opted for this optional Medigap benefit will not see a bill.
• Physicians who have opted out: Not only do these doctors not accept assignment but they have opted out of Medicare completely. They do not bill Medicare and must establish a contract with the patient. Neither the physician nor the beneficiary can bill or receive payment from Medicare. (This is the type of physician that Sandy and Tom had.)

So, the next time you see a new physician, check his or her status at https://www.medicare.gov/physiciancompare/search.html.

PS This information applies to beneficiaries who have selected Original Medicare with a Medigap policy. Those who elected Medicare Advantage must pay attention to networks.

I tried to use a $25 coupon to pay for a very expensive brand-name medication. My pharmacist said I couldn’t use it because I am on Medicare. Why is this? How come I can’t save money just like younger folks?

Manufacturers issue coupons to lure consumers into purchasing a particular coffee. In the grocery store, we can save on cereal, coffee, soup, all kinds of food items. However, for those with Medicare, things change.

When it comes to medications, a coupon can entice a Medicare beneficiary to purchase medication A, instead of medication B. When the products involved are part of a Federal program, such as Part D medications, the anti-kickback statute comes into play. This statute makes “it a criminal offense to knowingly and willfully offer, pay, solicit, or receive any remuneration to induce or reward the referral or generation of business reimbursable by any Federal health care program.” In other words, using a coupon to purchase a Part D medication would constitute a fraudulent claim until Federal law.

This same stipulation applies to drug discount programs. The beneficiary pays a fee and gets discounts on selected medications. 

Also know that younger folks, such as those who are on Medicaid, another federal program, can’t use coupons for medications. This same rational applies to discount programs, such as a medication savings card. 

Beneficiaries always have the option to purchase medications outside of the Part D prescription drug plan. If there is a valuable coupon or discount, tell the pharmacist that you want to pay for this drug and not to process it through the insurance. 

Help! My drug costs have gone up tenfold. In December, I paid $45 for my prescriptions. The January bill was over $480. How can the drug companies get away with this? Signed, Susan.

Susan, don’t blame the drug company. It is just following Medicare’s standard Part D prescription drug plan formula and charging a deductible.

 A deductible, for either prescription medications or medical care, is the amount the beneficiaries (or insured) must pay before the plan begins to pay its share. Medicare set the standard deducible for a 2022 Part D drug plan at $480. After reaching the deductible, the drug plan then charges the beneficiary a fixed copayment or coinsurance for each prescription; the plan pays the rest of the cost.

In other words, once the beneficiary has paid 100% of the costs up to the deductible’s limit, costs will drop, sometime considerably.

After the big bill in January, Susan’s drug costs will drop to $72 in February, after meeting the plan's 2022 deductible.

Here are some important points to know about the drug plan deductible.

• In some plans, Tier 1 and/or Tier 2 medications are not subject to the deductible. That means, the plan starts paying its share for those medications from day one. 
• Drugs that are not listed in the plan’s formulary do not apply to the deductible.
• Money spent in the Deductible stage will count toward getting out of the donut hole (Coverage Gap). (Read more at www.65incorporated.com/topics/medicare-part-d-prescription-drug-plans/paying-drugs-donut-hole-q-65-incorporated.)
• A plan cannot change the deducible amount during a calendar year.

When choosing a drug plan, it’s important to go beyond premium and deductible to the overall costs for year. After the initial sticker shock, it’s possible the costs may end up lower.

Sam was considering two plans. The first one had no deductible with total out-of-pocket costs for the year of $629. The second plan had a $400 deductible; however, his costs for the year would be $416. Once he reaches the deductible in this plan, his copayments will be lower. 

One thing our clients have in common: They find the whole process of Medicare enrollment to be stressful. We know that stress can interfere with clear thinking and good decision making. So, before starting with Medicare, consider these actions.

• Take the dog for a walk or play a round of golf. There are links between exercise and brain chemicals that connect with decreasing stress, anxiety, and depression.
• Have an occasional glass of wine. The moderate consumption of alcohol is often associated with improved cognitive functioning.
• Watch reruns of Seinfeld, Coach, M*A*S*H*, or whatever tickles your funny bone. It has been medically proven that laughter is an effective painkiller (not that Medicare causes pain).

Check out the 65 Incorporated website. The library at https://www.65incorporated.com/education/ provides clear, easy-to-understand Medicare information to help you get up to speed.

Which scares you more — Halloween or the Open Enrollment Period? No doubt, the latter because it deals with your Medicare. Looking at all the changes and deciding whether to switch to a different drug or Medicare Advantage plan can be threatening.

Why is this so scary? The notice of changes booklet your plan sends can be hundreds of pages, an inch or more thick. How do you begin to sort through all that information? Then, what if you pick a new plan and it turns out worse than the one you have? For many, it’s just easier to ignore the whole thing.

However, deciding not to do anything can create many problems. Consider this example. Jennifer takes one medication that costs $25 a month this year. When the notice of changes arrived, she confirmed that her current plan would still cover that drug and her pharmacy was still in-network next year. She can keep the plan she has. However, she missed some changes with impact on her costs and coverage.

• Several generic medications are changing from a Tier 2 to a Tier 3 next year.
• The coinsurance for Tier 3 drugs will be 40% of the costs, up from $40.
• Several pharmacies will no longer offer preferred cost sharing. (Find out what this means at https://www.65incorporated.com/topics/medicare-part-d-prescription-drug-plans/corner-pharmacy-may-not-be-your-best-deal/.)

Put these changes together and Jennifer's medication will be a Tier 3 and her pharmacy will offer only retail cost sharing. Her out-of-pocket cost will surge to $146.

Open Enrollment may scare you but you should be terrified about what can happen if you do nothing at all. When you get the information, pay attention to the changes. Look at other plans available. And, if you need help, contact 65 Incorporated. We can help take the scare out of Open Enrollment. Find out how at https://www.65incorporated.com/personalized-medicare-enrollment-consultation/open-enrollment-consultation.